New York Codes, Rules and Regulations
Title 11 - INSURANCE
Chapter III - Policy and Certificate Provisions
Subchapter B - Property and Casualty Insurance
Part 73 - Claims-made Policies; Scope Of Application; Minimum Standards
Section 73.0 - Preamble

(a) Traditionally, most liability insurance policies protect against injury or damage that occurs during the policy period. Such "occurrence" policies generally provide coverage, even though an actual claim is made or suit is filed, arising from that occurrence, subsequent to the policy period. In contrast, "claims-made" policies generally provide coverage only when a claim is made during the policy period with regard to injury or damage that has taken place during that time.

(b) Following a public hearing on the Commercial General Liability (CGL) claims-made policy form proposed for general application by the Insurance Services Office, Inc. (ISO), and after evaluation of information received as a result of numerous meetings and communications with all interested parties, the Insurance Department issued an opinion and decision dated October 11, 1985 disapproving the proposed policy form and related endorsements for use in this State. Additional modifications thereafter submitted by ISO have been carefully analyzed by the department, which, however, reaffirmed its disapproval of the claims-made policy form approach for CGL purposes.

(c) The Insurance Department finds that claims-made coverage tends to provide less protection than occurrence coverage, that claims-made coverage compared to occurrence coverage is a more complicated and confusing method of coverage that can create potential coverage gaps and that, on balance, across-the-board application of the claims-made policy form for all types of liability coverages would be an unwarranted and inappropriate change in the traditional insurance system and, therefore, not in the public interest.

(d) As indicated in the October 11, 1985 opinion, however, the department has approved, and will continue to approve, claims-made policy forms for specific types of commercial liability coverages, as authorized by this Part, where substantial availability problems have been experienced, where there is sufficient size and sophistication, or where risks embody exposures with long-tail or latent injury characteristics. The department, taking into consideration the range of existing and potential problems with the claims-made policy form, sets forth in this Part governing definitions and minimum standards required for department approval of a claims-made policy form in such areas.

(e) The fourth amendment adds employment practices liability to the list of coverages eligible to be written on a claims-made basis; lowers the financial threshold requirements for large commercial insureds; and eliminates a disclosure requirement. These actions recognize marketplace developments over the last decade that have resulted in the widespread use of claims-made policies and the increased knowledge and sophistication of insureds, insurance agents and brokers with respect to this coverage.